STATEMENT OF HON. F. H. SHOEMAKER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MINNESOTA

Mr. SHOEMAKER. Mr. Chairman and gentlemen of the committee, as an actual farmer and as having had approximately 25 years of experience with various farm organizations throughout the United States, in the organization of cooperative institutions, and so forth, I have prepared a little plan which I would like to submit to this committee for consideration, and it is a plan which I think will be constructive and which will stimulate business, start our manufacturing industries going, thereby creating a market for our farmers and at the same time will not cost the taxpayers anything in the way of a tax or a levy.

In the first place, the money problem is the most serious part of our entire social fabric at the present time, and our immediate set-up which can be eliminated by taking three basic farm articles or commodities, wheat, cotton, and tobacco. Wheat, the older it is the better it is for milling purposes; tobacco increases in quality with age, while cotton is not affected by age. And the way to handle this is to issue actual currency, commodity currency, against these three staple products. These three staple commodities will act as a leverage to bring farm prices on all other commodities up.

Let me take, for example, wheat. The Government figures show that it costs $1.05 a bushel to produce wheat. That was the last figure that we have available from our Department of Agriculture, No. 1 northern hard. This is taken into consideration by averaging the cost of wheat production with some of the non-wheat-growing territory where wheat is not actually grown, as well as where it is successfully grown. But to illustrate that, we can take wheat for easy figuring as $1 a bushel, and instead of handling this in the manner that it was handled by the Farm Board-if I am correctly informed, there have been millions of bushels of wheat bought by the Farm Board and stored in our elevators, such as terminal elevators at Minneapolis and St. Paul, on which I have been told there has been a rate of 2 cents per bushel per month paid for storage on that wheat, and where it has been in storage for 2 years the amount of storage charged against the wheat is 48 cents a bushel, and the wheat when it was finally sold was listed somewhere around 40 cents a bushel in Minneapolis. So we not only lost the storage and money on the wheat, but we lost the entire money that was paid for the wheat plus the railroad transportation and freight charges to deliver it to these elevators. If we will change that around now and store this wheat on the farms-for illustration, if Senator Norris has a thousand bushels of wheat on his farm, he provides suitable storage for that wheat, and he goes to the Government and gets $1,000 at $1 a bushel, we will say for easy figuring, printed money, against that wheat. This wheat he must keep insured and make the Government the beneficiary against the elements. As long as that wheat is stored on his farm, he must also pay one half a cent per bushel annually to cover the clerical overhead on that wheat. This immediately gives him a thousand dollars in wheat currency that he goes out and spends for the various things necessary on his farm, new shingles or paint on his house, or pay up the debts that he owes the International Harvester Co., and pays

his

taxes, and so forth and so on. This will start up your industry and put purchasing power back into the hands of the producers.

Now, it will be argued that this cannot work because of the difference in our bushel of wheat and the Argentine bushel of wheat, and a provision can there be brought in whereby any importer that is buying goods in any foreign country can exchange this money based on commodities for regular large currency money, gold or silver, when he wants to step outside of the United States and use the regular dollar. This will put something of value, something of utility, something material and something that can be used, back of every dollar that is floating.

Some of you may say that this in inflation. This is not inflation because it automatically takes care of itself in this manner: If the United States Government is the only dealer in wheat, the miller must go to the Government to buy that wheat. He in turn buys a thousand bushels of wheat from the Government and surrenders to the Govvernment $100,000 of this commodity currency, which is then destroyed by the Government.

Senator THOMAS of Oklahoma. Will the gentleman yield for a question? Have you any reform bill such as this in the House of Representatives?

Mr. SHOEMAKER. I tried to, but we were worked too fast.

Senator THOMAS of Oklahoma. Why do you not experiment over there, rather than experiment on the Senate with your ideas?

Mr. SHOEMAKER. Well, I did not know I was experimenting, Senator. In fact, I do not think this is an experiment.

Senator THOMAS of Oklahoma. What do you think about this bill before us?

Mr. SHOEMAKER. What do I think about the bill as it left the House?

Senator THOMAS of Oklahoma. Yes, as you passed it.

Mr. SHOEMAKER. Very emphatically I would class it as a monstrosity, from my observation, although I hope I am wrong. [Laughter.]

Senator CAPPER. You were one of those who voted against it? Mr. SHOEMAKER. No; I voted for it. [Laughter.] You see, Senator, we do not have quite the opportunity for discussion over in the House, and I could not vote for anything else, so I was caught between the devil and the deep blue sea.

The CHAIRMAN. You considered the Senate was a hospitable place to go?

Mr. SHOEMAKER. Well, I felt it was a place that I might go to be heard. [Laughter.]

Senator CAPPER. I thought you would have presented this plan of yours to the House.

Mr. SHOEMAKER. I did not get an opportunity, Senator, I am sorry. I would have liked very much to present it to the House. [Laughter.] Senator NORRIS. I think those of you who have served in the House realize the predicament that was presented to the Congressman.

Mr. SHOEMAKER. Four hundred and thirty-five people there were trying to get into that agricultural committee, and they could not all get in.

Senator NORRIS. No; it cannot be done.

The CHAIRMAN. You all seem to vote pretty regular over there. [Laughter.]

Mr. SHOEMAKER. Well, I have not been just exactly regular. The CHAIRMAN. Are there any questions that the committee desires to ask Mr. Shoemaker?

Mr. SHOEMAKER. I would like to add that in the carrying out of this plan, it could be carried out by every postmaster and every rural carrier throughout the United States being made a representative of the Government for that purpose, so that he could pick up this wheat for sampling, and it could be reported to the county agent, who is more or less an ornament at the present time, and this would give him something to do, who in turn would report it to the State department of agriculture and to the Federal Government, so there would be a check-up on this material at all times. Also the fact that this wheat is stored on the farm would do away with one of the greatest evils that the farmer has to contend with today, and that is gambling in food products. This wheat stored on hundreds of thousands of farms throughout the United States of America would make it impossible for anyone to gamble in these wheat products. Furthermore, under my plan, this would be carried out through the Department of Agriculture and the Secretary of the Treasury, and a holiday could be declared, or a vacation in wheat or cotton or tobacco, as the case might be, but the three principal commodities which are nonperishable and do not spoil and can be stored on the farm would be the basis back of our currency that would in 60 days bring prosperity into this country and put buying power back into the hands of the farmer, allow him to pay his interest and his debts and his mortgage and his taxes, and so forth and so on, and go on like most any other American citizen does.

I have spent considerable time on this farm situation. I may not have it all; I do not say that I have a panacea for all ills, but I feel that in 26 years a person ought to learn just a few things; if he does not do it in that time he had better resign and quit.

The CHAIRMAN. We are very much obliged to you, Mr. Shoemaker. It seems almost impossible to limit them to 5 minutes. Mr. Hart wants to be heard for 5 minutes.

STATEMENT OF HON. MICHAEL J. HART, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN

Mr. HART. I will lay my watch on the table, Mr. Chairman. My name is M. J. Hart, Saginaw, Mich. I am a farmer, growing everything included in this bill, except rice, cotton, and tobacco. I would like to have everything I grow exempted from the bill, because I do not believe the Government or anybody else can pass the contemplated tax on to the consumer at the present time.

My plan for aiding the farmer is to remove the tax known as the tariff, which he has to pay. Let us assume that Senator Smith has 3 horses and that Senator Thomas has 3 cows. Senator Thomas wants to get rid of 2 cows and get a horse. The Government comes in and says there must be 30 percent paid each way before he can do it. There would be no trade. He would have to pay the tax in cash, and he does not have it.

Now, I did introduce a bill in the last session which would provide for the removal of the tariff on the surplus, on surplus commodities when exported direct to foreign countries. For instance, if England

was to sell us $100,000 worth of merchandise with a $20,000 duty on it, they would be given a certificate or the importer would, showing the total value of the goods and the duty paid. When an exporter exported $100,000 of wheat, he would be given a certificate, showing the value of the goods, based upon the invoice, and the country to which it went. Now, then, when they bring those two certificates together, present them to the Treasury, the duty would be remitted on the imports. That would only be on exportable surpluses, as determined by the Secretary of Agriculture. That would immediately create a demand, because those certificates would be traded in to the point where we would have no competition. That would do away with the Ottawa pact, where Australia-where Canada has a 6-cent advantage over America on wheat.

The natural tendency of people is to get together and trade. You know you heard after the war that England was not going to trade with Germany, that France would never deal with Germany, but the minute there was a chance for a dollar's profit, they came together, and you pass that law and you won't need to make any commercial treaties. The two will naturally get together. If a fellow has a $20,000 certificate, he is going to find a merchant in Liverpool or somewhere who will buy an exportable commodity, and if he can't get the $20,000 he will take $10,000, but he will see that there is an exportable commodity so that he can get that certificate and go to the Treasury and get whatever he can of his tariff remitted, and this naturally siphon out of this country your exportable surplus, because there are thousands of people in Germany and France and Switzerland and various other countries in Europe that do not have sufficient food of the quality and type that we have to export.

Senator FRAZIER. We have got several million here at home that have not got enough to eat, either.

Mr. HART. Yes; because your agriculture prices have broken down due to tariff which you helped to inflict on the farmer.

Senator FRAZIER. Well, the prices are low enough.

Mr. HART. Yes; but you can not ship it out when the other fellow has nothing to pay with. There are only two ways to pay for it, one is gold, the other in goods. He has got no gold and you will not take goods, so he can not buy anything. You protect industry and you do not protect the farmer. I represent an agricultural district.

Now, I have sat here and listened to the testimony. Most of it has been delivered by those who have benefited by past laws of this kind and who are today representing concerns that are borrowing money from the United States Treasury. Men have come in here and testified that they would like to have a law of this kind so they could continue. Some of them have lost eighty or ninety million dollars of the Government's money. I do not consider their testimony worth very much on that basis, and I do not want them monkeying with the products that I raise. I will take care of myself. I am marketing every commodity listed in that bill, with the excep tion of rice, cotton, and tobacco.

Senator FRAZIER. Do you think you speak for the farmers of Michigan?

Mr. HART. I speak for the farmers in the eighth district of Michigan, because they sent me here, and they know my views.

Senator THOMAS of Oklahoma. Are you getting cost of production for the things you produce?

Mr. HART. NO; I am not getting cost of production on some of the things I produce. I have been losing $10,000 a year marketing farm products. I have lost it for four years straight.

Senator THOMAS of Oklahoma. Do you think your prices will still remain down when the surplus is taken care of?

Mr. HART. If you refer to the bill under consideration, that is on the assumption that when the patient is sick you might give him poison and he might get better. I do not want to take that chance. We are gradually getting better. I paid $3,000 taxes on my farm in 1930; last year I paid $900. That is some relief. And when you reduce these railroad rates, you reduce utility rates, you reduce telephone and telegraph, reduce the cost of distribution, reduce rents in the cities and cut the cost of distribution, the farmer's price will rise, but you try to jack the price up artificially and it will go down and your taxes will go up, and you will stall consumption.

I have been marketing for 30 years, as well as farming. I have got 800 acres, and I am in the same position that Mr. Jensen described his farmers are in. I have got a $40,000 mortgage on the farm. I cannot earn interest on it, but I am paying the taxes and keeping the plant up, and if my mortgagee had bank stock he would have lost the bank stock and probably be assessed 100 percent on it. Now, he has got the farm and I am keeping it in good shape and he is satisfied and so am I. But I do not want any more nostrums worked on me. I have got something at stake, and I hope to pay that mortgage out at $40,000 if I am let alone. We are not always going along in this way. Reduce your fixed charges; that is what we need. I am at the point now where in another year I will make a small profit, but if we have any more farm marketing acts, I feel that I will be sunk.

The only feature in that bill that passed the House that had any chance of success and that is a speculation, and I voted against the bill was the Smith speculative feature in cotton. That was a pure speculation but it did have some chance of success, but I voted against it because I believed the Government should keep out of speculation. Mr. Roosevelt said when he landed on that platform in Chicago from a plane that any law that put the Government into speculation should be repealed, and I voted with him on that.

Senator MURPHY. Just one question, Mr. Hart. In connection with that tariff proposal of yours, your idea is to lower the tariff so that the fellow that comes here to trade

Mr. HART (interposing). Exchange with him on an even basis. Senator MURPHY. Give him the benefit of the tariff if he comes here to buy our goods?

Mr. HART. To buy our surplus.

Senator MURPHY. Our farm surplus?

Mr. HART. Yes. And we fix in the bill what they are. It may not be necessary to cancel all the duties. You can make it flexible. Give the President authority to raise and lower it, the same as you do under the present flexible provision of the present tariff act.

The CHAIRMAN. Is not that another way of doing what the debenture plan attempted to do?

Mr. HART. The debenture plan did not take into consideration the tax on European goods coming into this country which were ex